Determinants of Non-Alcoholic Beverages: A Case of Punjab

62 Determinants of Non-Alcoholic Beverages

Journal of Management and Research (JMR) Volume 4(1): 2017

Determinants of Non-Alcoholic Beverages:

A Case of Punjab Pakistan

Manan Aslam1

Shahid Latif 2

Abstract

This current research endeavors to study important factors having

a significant impact on consumer’s choice of beverages in Punjab

province of Pakistan. Beverages in two major categories of ‘hot’

and ‘cold’ have been studied to examine consumer consumption

pattern. Data has been collected through interview from 80 re-

spondents belonging to these two major cities of Punjab i.e. La-

hore and Faisalabad by incorporating stratified random sampling

technique. These two cities of Punjab were selected because of

their big departmental stores like Metro cash and carry store, AL-

Fateh and others. A pre-tested and well-arranged questionnaire

was used for data gathering from the respondents. To estimate the

outcome of factors affecting the choices of consumers (demand

function), multiple regression was incorporated. Results of this re-

search showed that consumption pattern of cold beverages was

affected significantly by consumer income, cold beverages prices,

city selected for survey and number of adolescents in a family

whereas factors which affected the consumption of hot beverages

were food expenditure, living area, marital status, income, work-

ing persons in a family and family size. Due to availability of var-

ious brands of beverages, consumption is accelerating with the

passage of time and consumers are willing to pay for beverages

due to change in various socio-economics factors in the society.

So, local industry should produce cost effective and quality drinks

to enhance the usage.

1Manan Aslam, Department of Marketing & Agribusiness, Muhammad Nawaz Shareef

University of Agriculture; 2Shahid Latif, School of Commerce and Accountancy (SCA), University of Manage-

ment & Technology.

Correspondence concerning this article should be addressed to Manan Aslam, Depart-

ment of Marketing & Agribusiness, Muhammad Nawaz Shareef University of Agri-

culture. E-mail: [email protected]

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Determinants of Non-Alcoholic Beverages 63


Keywords: multivariate analysis, metro cash & carry, Al-

Fateh store and beverages

1. Introduction

A beverage is a drink that is used explicitly for consumption of humans.

This beverage industry in Pakistan has seen a prompt development dur-

ing the last couple of years. Juices, soft drinks, syrups, squashes and milk

are the products of this industry (Ahmad, 2003).

Worldwide, the beverages consumption has been increased

enormously (Popkin, 2012). Beverages are classified as alcoholic as well

as non-alcoholic; and non-alcoholic is further categorized as cold and hot

beverages. Changing priority of consumer, increase in government di-

rectives and globalization has a great influence on the manufacturing of

these beverages around the globe.

Beverage and processed food industry have an enormous contri-

bution in Pakistan industrial division. There is a contribution of 16% of

entire employment and 27% of the whole production in manufacturing

component (Shabir, 2004). More than 900 units were involved in food

and beverages manufacturing (Haidari, 1997). Industrial revolution has

created a huge impact on this industry and as a result of it, this industry

has grown massively in Pakistan.

Ahmad (2003) revealed that all over Pakistan almost 170 bever-

age industrial units are working at present. Beverages industrial produc-

tion reached to a level of $2 billion during the previous years Khan

(2009). People living in Pakistan consume non-alcoholic beverages to a

great extent. Life style is changing rapidly, population is growing and

shifting towards urban areas and due to this there is a rapid growth of

beverages industry. Among beverages, fruit juices, soft drinks, tea and

coffee are the most prevalent. Even most of the people prefer to have a

beverage along with meals.

In comparison with the carbonated drinks, processed fruit juices

are considered to be nutritious, manufacturing for their refreshing and

energizing feature because it carries healthy stable nourishment along

with vitamins and minerals that are our body’s requirement (Mohamed

& Eissa, 2012). That’s why these juices are very much popular and ex-

panding all over Pakistan especially in hotels and hospitals where they

are effectively advertised and promoted (Maqbool, 2008). At this time,



there are thirty-eight production units of fruit juices, squashes and syrups

are operational in all over the country. Major manufacturing includes

Mitchells Fruits, Nestle and Benz.

Primarily, fruit juices manufacturing units are being functioned

in Lahore, Hattar, Loralai, Sargodha, Karachi, Hyderabad and Bahawal-

pur. Major fruit juices market is in a form of 250 ml packaging. Due to

a rise in raw material and packing cost, the prices of the fruit juices and

other associated products have been escalated in the local market

(Bardhan, Jha, Jaiswal, & Alenis, 2010). Due to the fruit juice, as a pre-

ferred choice around the globe shows the possibility to increase in the

growth of this industrial sector, in addition to this fruit industry has rap-

idly flourished because of increased exports and exclusion of CED (cus-

tom and excise duty) which are locally manufactured on fruit juices

(Maqbool, 2008).

People in Pakistan consume juices very much and reason behind

the success of these drinks is mainly associated with the availability of

branded beverages as Nestle Fruit Juices, Rani and Minute Maid etc.

(Aslam & Rasool, 2013). Hot beverages like tea or coffee are used mas-

sively in Pakistan and its market has grown promptly due to the opening

of different coffee shops where many people approach for coffee con-

sumption. Its consumption is much lesser than tea due to availability of

inexpensive tea and lesser buying power.

Traditionally, tea is widely used in Pakistan and is served as

guest and household servings. There are many brands of tea prevailing

in the market. Tea is also imported and Pakistan is the 3rd major tea im-

porter. Increase in per capita income and urbanization are the main

causes of increase in tea consumption (Shabir, 2004). In Pakistan, per

capita tea consumption is about one kg per annum. More than 140 tons

of tea is being imported by Pakistan (Waheed, Hasid, Ahmad, & Khan,

2002).

In order to satisfy wants regarding purchase and using products,

consumer behavior assists in examining diverse activities and proce-

dures that many people are involved in. Environmental factors like sea-

son and weather and social factors like culture, income, and subculture

and reference group influence the purchasing pattern. External factors



like changing life styles and consumption pattern and psychological fac-

tors as perception, self-benefits and learning also play a vital role in this

aspect.

If we go through the existing literature related to the user’s deci-

sion to choose and their priorities, it is revealed that many surveys are

present which describe the impact of significant variables that affect the

priorities of users for the different things such as for fresh meat (Becker,

2000), for meat (Grunert, Bredahl, & Bruns, 2004) and for the organic

food (Shaharudin, Pani, Mansor, & Elias, 2010) etc. Some empirical sur-

veys are present that describe the user choice for the drinks are rare and

these include Murtaza et al., (2004), Grimm, Harnak, & Story, (2004),

Khan (2009, June 28) etc. In this survey, it was planned to examine the

significant factors which affect the user’s preferences in the two main

cities for beverage industry.

2. Literature Review

Pollard, Kirk, and Cade (2002) concluded that decision of food choice is

related to the intake of fruits as well as vegetables by the consumers.

Some problems make this decision difficult such as sensory appeal, hab-

its similarities, social contact, media and ads, cost of products, access to

the products, health issues and time constraint. Fruit and vegetables con-

sumption at some specific occasion or time is affected by these issues

intentionally or unintentionally. To some groups of respondents some

techniques were used for the promotion of health considering the same

values related to the choices of food. This paper examined that for mak-

ing choice related to food, some education should be provided to the peo-

ple to know about the effectiveness of nutrients.

Shabir (2004) analyzed that half production of vegetables and

fruits were destroyed in collecting, storing and preserving processes and

only 4-5% fruits were imported by the USA. To cope up with the damage

of fruits, Pakistan is making a wide range of different juices. But it could

not meet the standards of APHRIS (Animal and Plant Health Regulation

Inspection Services), so they could not be exported to the USA. He also

suggested that Pakistan can export these fruit juices to the USA and save

foreign investment following by good marketing.

Geuens, Brengman, and Rosette, (2003) concluded that people

are too busy and have no time for going to shopping. They wanted all

variety of products, low rates, good environment and good designs at one



store. In last few years’ demand for juices in Pakistan has been elevated

too. Weather condition is a main and foremost factor for this demand

elevation. They are included in daily food that’s why to achieve the de-

mand level juices are imported. A lot of investment can be saved by man-

ufacturing them locally. For preserving juices, he suggested different

methods like heating, chilling, radiation treatment as well as the use of

chemical preservers (Murtaza et al., 2004).

Shields, Corrales, and Metallinos-Katsaras (2004) analyzed the

intake of gourmet coffee in college ladies. Comparatively it was a new

drink in market and thought and used for high energy. He conducted a

study to analyze the usage of coffee and find the role of energy and fat

among the ladies in their diet. The survey was conducted by using a ques-

tionnaire and a diary of 3-day food choices. Questionnaire, which was

pre-tested, was filled by the 165 graduate and undergraduate college la-

dies’ diary was completed by 41 ladies. Study was conducted between

two groups i.e. users of GCB (gourmet coffee beverage) and non-users.

Outcome showed that coffee drinkers had high intake (P=.250)

of calories (206Kcal/day) and sugar (32g) than the respondents who

don’t use coffee (p<.05). A significant and bigger percentage of college

going ladies used coffee and take more fats and extra energy. These extra

fats and increased energy badly effect on the weights of the college la-

dies. Education should be provided to the people related to energy and

fat and their effect on weight, and healthy choices should be provided

such as skimmed milk as compared to the full fat milk.

Bonilla (2004) conducted a study that revealed the significance

of nutrition and health. Development and increase in income provides

new chances of new products and their changes. Significant features of

the products were their price and quality but in the current scenario label

and packing of the product also have a great impact on the buying be-

havior of users. Study analysis revealed that consumer’s decision to pur-

chase a product in case of fruit juice is effected by the label, packing and

its 100 percent quality of fruit juice. Before launching new products in

market the producers and marketing persons should recognize the user’s

behavior, priorities and their needs.

Grimm et al. (2004) conducted a study related to consumers’ at-

titude for label and brand of juice was conducted. In that study, it was



shown that 68 out of 100 percent consumers use juices daily in the morn-

ing. It was also revealed that 70 out of 100 percent react towards the

prices of the product and for grocery buying use vouchers or coupons

and like readymade and convenient food.

The current study showed that main factors which are the causes

of the usage of beverages among children. He surveyed through a ques-

tionnaire and the sample was 560 children of ages between 8 to13. 49%

girls and 51% boys were used as the sample for the study. For factor

analysis frequency distribution as well as multivariate logistic regression

was used. Results suggested that taste of the cold drinks was the signifi-

cant and strongest factor. Parents and friends’ usage habits of drinks, ac-

cess to drinks at home as well as school and media advertisements were

the factors to consume drinks among children

Flood, Roe, and Rolls (2006) suggested that a large quantity of

beverages was used for the intake of energy. Caloric drinks were com-

monly and widely used in lunch and they are used for enhanced levels

of energy consumption. This paper showed that the choices of people for

drinks in the food caused an increased level of drinks consumption.

Large quantity of drinks was used in food that’s why this level increased.

Consumption of energy could be reduced by replacing the drinks of high

calories with low calories.

A study examined the behavior of users toward the buying action

of organic milk. To analyze the purchasing behavior and other charac-

teristics such as socio- economic factors regression and group analysis

were used. Four groups of variables were examined. Organic milk buy-

ing behavior is tested by the respondents. Their small size of family as

well as education affects the pattern of purchasing and income does not

have any effect on the buying pattern.

Laitala, Kaprio, and Silventoinen (2008) examined the coffee

heritability in Finland and its constant liking in a sample of twins. It was

most likely hot drink as compared to any other drink in Finland. Coffee

had a considerable impact on the health and welfare of the people. Study

measured that the intake of coffee was influenced by the exclusive envi-

ronmental aspects and additive genetics. Heritability of adjusted use of

coffee for sex and age measured in 1975 was 0.56 and in 1981 it was

0.45. Genetics attributes which affected coffee usage were constant

while correlation of genetic factors was 0.83 in ladies and 0.84 in men.



Correlation of environmental factors was measured as moderate i.e. 0.36

and 0.45.

Additive attributes had a maximum impact in young adults.

They measured that use of coffee is influenced by both the factors i.e.

exclusive environmental and additive genetics attributes and both ele-

ments play a significant role. Constant use of coffee in long term duration

is influenced by the set of constant additive genetic attributes. The study

revealed that factors were analyzed, which were the cause of increase in

drinks industry progress and development. Beverages demand was in-

creased by the ads, marketing, life patterns and technology. This study

showed the obesity effects in children and effect of these drinks on the

atmosphere (Maqbool, 2008).

A study was conducted with reference to a large variety of prob-

lems in relation to the use of soft beverages and examined the association

between beverages usage, effect on health and weight. In Australia and

NSN, this survey measured the level and nature of use of the drinks.

Young children like and use sweet drinks containing sugar. The use of

these sweet drinks on daily basis causes an imbalance in energy and low

level of nutrients in children. In Australia milk and fruit juices are main

and important food. Different factors i.e. psycho-social, environmental

and socio-cultural elements have an impact on the usage of drinks. Re-

sults revealed that to decrease the complete beverage usage new research

and innovation will assist to enhance the efficiency of the present inter-

ventions. With all of these more plans related to environment are re-

quired to decrease this level of consumption. Plan should be about price,

labels, packing, marketing, promotion and the size of portion (Hector,

Rangen, Gill, Louie, & Flood, 2009).

Heuberger and Boyle (2009) conducted a study to delineate the

effects of drinks usage on people’s health. Drinks such as carbonated

beverages had less nutrition and were the reason of obesity. Level of nu-

trition of the body is badly and negatively affected by these carbonated

beverages. This study revealed the risk of drinks usage choices among

the respondents living in the rural areas. This survey was conducted by

using many questionnaires and experienced interviewers.

A cross-sectional sample of 760 respondents was used. The re-

sult revealed that the use of carbonated drinks and alcohol was associated

to improved and enhanced level of calories and BMI (body mass index).

The caloric derivation of carbonated beverages and alcohol usage were



higher in younger individuals aging less than 35 increased their weight

(p<0.5). National research council suggested the age for male and fe-

males is 34 – 53 for the carbonated drinks and alcohol usage.

Johns (2009) examined the Mexican retail industry and con-

cluded that global economic downturn was greatly affected by the retail

segment related to grocery. People’s lifestyle and standards had been en-

hanced by the convenience stores. Main factors of this enhanced and bet-

ter lifestyle were that consumers don’t like to go to distant places for

shopping and stores which are available and open day and night. He

stated that due to the bigger markets and chain of stores sales were ele-

vated in the last year. In the last few years the soft drinks industry is con-

tinuously increasing and elevated to the standard level of $2 billion. Its

growth rate is increased up to 18% till 2009 (Khan, 2009, June 28).

Aslam and Rasool (2013) described that the local beverages

(fruit juices) should be promoted so in this way everyone from any in-

come group could relish the beverages. In the meanwhile, export earn-

ings of fruit juices should be enhanced by growing acreage and cultiva-

tion of the fruit crops. So, in this way foreign earnings would be in-

creased, employment opportunities would be created mainly in the units

of juice processing and this would pave the way of prosperity. Processed

food consumption was very much high in Brazil and people included

beverages in their diet (Duffey, Pereira, and Popkin, 2013) .

A study conducted by Duran, Almeida, Latorre, and Jaime

(2015) in Brazil showed the impact of local environment of retail food

on fruits, vegetables and sugar based beverages. In Mexico, there was a

higher rate of per capita consumption of soft drinks Colchero, Salgado,

Unar-Munguıá, Hernańdez-A´ vila, and Rivera-Dommarco (2015).

3. Methodology

For this study, primary data is used. With the help of a well-arranged and

complete questionnaire the data was collected. For the study, 80 consum-

ers provided us with the data. Both are industrial cities that is why most

of the people living in these cities are manufacturers and laborers. Due

to this reason, consumption function related to different income groups

can be easily seen. Sample technique in this study was stratified sam-

pling (equal allocation). From both of the cities, 40 consumers were se-

lected. For the research purpose customers of big departmental stores

(Al-Fateh, Metro Cash & Carry and other different stores) were used and



double log form of regression was used to calculate the effect of main

factors that affect the usage of cold and hot drinks.

3.1. Conceptual Framework

For analyzing the activities and procedure of people during finding, buy-

ing and consuming the good for their needs, user attitude and behavior

can help. Many environmental elements such as season or weather and

social factors such as culture, income, reference groups etc. affected the

buying behavior of the user. Decision for buying things and user’s choice

can be influenced by the external features like change in the using pattern

of goods, health, status and lifestyle. Ads and some psychological fea-

tures such as opinion, awareness and personal benefit are also some char-

acteristics.

Literature work related to consumer’s priorities and selection

showed that different studies are present which describe the effect of sig-

nificant variables and factors that affect user’s priorities for the goods

such as Becker (2000) study on fresh meat and Grunert et al. (2004), as

well as Tendero and Bernabeu (2005) paper for cheese and Humayun

and Hasnu (2009, November) study on liquid milk and Shaharudin et al.

(2010) survey for organic food. Simultaneously empirical survey such

as Murtaza et al. (2004), Shields et al. (2004), Grimm et al. (2004),

Laitala et al. (2008), Singal (2009) and Khan (2009, June 28). Regarding

this literature, the aim of this study is to explore and check the impact of

main factors influencing the user’s preference for drinks in two cities of

Pakistan i.e. Lahore and Faisalabad.

Figure 1: Conceptual Model for Cold Beverages

City of Survey

Family income

of household

Price of Cold

Beverages

Quantity con-

sumed of cold

beverages Number of

Youngsters in a

family



3.1.1. Hypotheses for Cold Beverages

Increase in family income of household may lead to more consump-

tion of cold beverages.

Decrease in prices of cold beverages may result in more consump-

tion of cold beverages.

More young persons in the family may lead to more consumption of

cold beverages.

More young persons in the family may lead to more consumption of

cold beverages.

Highly populated city may lead to more consumption of cold bever-

ages.

3.1.2. Hypotheses for Hot Beverages

Increase in family income of household may lead to more consump-

tion of hot beverages.

Increase in consumption of other foodstuff expenses may result de-

crease in hot beverages.

Increase in number of family members may lead to more consump-


Decrease in prices of cold beverages may result in more consump-


Increase in working members in the family may lead to more con-

sumption of hot beverages.

Increase in married persons in the family may lead to more con-

sumption of hot beverages.

Change in living area may lead to less or more consumption of hot

beverages.

3.2. Theoretical Framework

For finding the results descriptive statistics will help to calculate the fre-

quencies as well as the percentage of the users. Average was calculated

by this formula:

AM = ΣX / N (1)



In this formula AM showed arithmetic mean, N showed total

number of observation and ΣX showed total sum of variables.

For percentage calculation formula was used:

P = F ∕ N * 100 (2)

Figure 2: Conceptual Model for Hot Beverages

Percentages were calculated for comparison. In this formula, F is

frequency and N total number of observations.

Living area

Food Expendi-

ture of Respond-

ents

Family size of

Respondents

Marital Status of

the Consumer

Family Income

of Household

Working people

in a family

Price of Hot

Beverages

Quantity Con-

sumed of Hot

Beverages



3.3. Demand Function for Cold Beverages

The relationship between dependent and independent variables is given

as;

Y = f (Xi, Dj) (1)

Where; Y = Quantity consumed of cold beverages (Liter / month)

Xi = Vector of quantitative variables i = 3

Dj = Vector of qualitative variables j = 1

In more specific form, equation 1 can be written as;

Y = βo Xi βi Dj βj e μ (2)

The equation 2 can be further explained as;

Y = βo X1 β1 X2

β2 X3 β3 D1

β4 e μ (3)

By taking natural log on both sides, equation 3 can be written as;

lnY = βo + β1lnX1 + β2lnX2 + β3lnX3 + β4D1+μ (4)

Where;

Xs are the independent variables in which,

X1= Family income of household (Rs/month)

X2= Price of cold beverages (Rs./liter)

X3= Number of youngsters in a family (No.)

D1 = City of survey (Dummy)

D1=1, if Lahore

D1=0, if Faisalabad

βo is the intercept, βs are the elasticities and μ is the random error

ln = Natural log

3.4 Demand Function of Hot Beverages

The relationship between dependent and independent variables is given

as;

W = f (Zi, Dj) (5)

Where; W = Quantity consumed of hot beverages (Gram / month)



Zi = Vector of quantitative variables i = 5

Dj = Vector of qualitative variables j = 3

In more specific form, equation 1 can be written as;

W = βo Zi βi Dj βj e μ (6)

The equation 2 can be further explained as;

W = βo Z1 β1 Z2

β2 Z3 β3 Z4

β4 Z5 β5D1

β6 D2 β7 D3

β8 e μ (7)

By taking natural log on both sides, equation 3 can be written as;

lnW = βo + β1lnZ1 + β2lnZ2 + β3lnZ3+ β4lnZ4 + β5lnZ5++β6D1 +

β7D2+ β8D3+ μ (8)

Where;

Zs are the independent variables in which,

Z1= Family income of household (Rs/month)

Z2=Family size of respondents (No.)

Z3= Food expenditure of respondents (Rs. / month)

Z4= Price of hot beverages (Rs. / gram)

Z5=Working people in a family (No.)

D1 = City of survey (Dummy)

D1=1, if Lahore

D1=0, if Faisalabad

D2 = Marital status of the consumer (Dummy)

D2=1, if married

D2=0, if otherwise

D3 = Living area (Dummy)

D3=1, if urban

D3=0, if otherwise

βo is the intercept, βs are the elasticities and μ is the random error

ln = Natural log



4. Empirical Results

This survey was conducted to analyze the effect of different factors that

had an impact on the consumption pattern related to hot and cold drinks

of the respondents. 80 randomly chosen respondents of Lahore and Fai-

salabad helped us to collect the data. The calculation of demand factor is

done through the regression and explained below:

4.1 Descriptive Statistics (Demand Function for Cold Beverages)

The association of independent variable (income of family, prices of

drinks, number of young adults and survey city) with the dependent var-

iable (use of cold drinks) was measured by using the double log of re-

gression analysis, because this relationship showed scattered plot be-

tween dependent and independent variables. Data of dependent variable

and quantitative independent variable was measured by the descriptive

statistics and this data is shown in table 1.

In this case, undesirable condition is multicollinearity where be-

tween independent variables correlation is strong. Tolerance is the term

used statistically for explaining that how much the dependent and inde-

pendent variables are linearly related.

4.2 Regression Analysis (Demand function for Cold Beverages)

Adjusted R2 for this case was 0.49 which showed that all independent

variables showed mutually 49 percent variation in the dependent varia-

ble (use of cold beverages) keeping all other elements constant. This

value also showed another aspect i.e. 51 percent change in dependent

variables that was affected by some of the other variables; their effect

could not be showed by this model used (table 2).

In this case F-value is 20.94 (p<0.05) which was significant

and indicated all the suitability of the model (Table 2). F-value suggests

that independent variables are non-significant or significant factors for

changing in dependent variables.

The findings showed that all variables are significant at 5% sig-

nificance level while only family income of household coefficient

showed significant level at 1%. This variable showed positive value at 1

% significant level with elasticity coefficient value of 0.497 which de-

picts that 1 percent increase in the respondent’s income causes an in-

crease of 0.497 percent in the cold beverages consumption. It showed



that high income group mainly used cold drinks. Cold drinks consump-

tion is comparatively income elastic. Cities taken for research are used

as dummy variable in demand function measurement of cold beverages.

Findings showed that at 5 percent significant level variables’ val-

ues are highly positive. The people of Lahore are using 0.228 times more

cold drinks as compared to the people of Faisalabad city. In case of food

stuff, price play an important role. Usage of cold drinks will increase as

a result of a decline in the prices and vice versa.

Price coefficient with t- value 0.852 has value 0.152 with nega-

tive sign which means 1% decrease in the price will increase the use of

cold drinks by 0.152%, keeping all the other aspects constant.

Youngsters use more cold beverages rather than the old people.

Coefficient for youngsters depicts positive sign with 5% significant level

at t- value of 2.154 with an elasticity value of 0.234. In our society

youngsters use more cold drinks.

4.3 Descriptive Statistics (Demand Function for Hot Beverages)

The association of dependent variable with the independent variable is

analyzed by the regression technique of double log form due to the scat-

tered plot that suggests such association. Dependent variable data i.e.

consumption/ quantity purchased and quantitative independent variables

were explained by the descriptive statistics such as Maximum, Mini-

mum, Std. Deviation and Mean. This description showed in Table 3.

Multicollinearity is an unwanted condition in which a strong cor-

relation between independent variables exists. Tolerance of independent

variables showed how much the variables are related linearly with each

other.

VIF (variance inflation factor) and tolerance are opposite or re-

ciprocal to each other in relation. If VIF increases, it causes an increase

in the variance of regression coefficient which make this estimate unsta-

ble. VIF value more than 10 showed the issue of multicollinearity

(Gujarati, 2008). This data has no issue of multicollinearity because its

VIF has value less than 10 (Table 3).





Table 2

Estimated Demand Function for Cold Beverages

Variables Coefficient Standard

Error T-Value

Significance

(P-value)

(Constant) -3.371 0.829 -4.066 0.000**

Family income of

household (Rs. per

month)

0.497 0.062 8.046 0.000**

Survey of city

(Dummy) 0.228 0.105 2.181 0.032*

Price of cold bev-

erages -0.152 0.178 -0.852 0.039*

Number of young-

sters (No.) 0.234 0.109 2.154 0.034*

R2 0.520

Adjusted R2 0.494

F-value 20.94 (Source: Author’s own estimations)

Note: NS Denotes Non-Significant

**Denotes significant at 1 percent level

* Denotes significant at 5 percent level 4.4 Regression Analysis (Demand Function for Hot Beverages)

0.37 was the value of adjusted R2 showed that altogether all independent

variables indicate 37 percent change in dependent variables keeping all

the other elements constant. This value also depicted that remaining 63

percent variation in the dependent variables was due to other variables

that could not be measured by this model (Tale 4). F-value explains that

altogether all independent variables are non-significant or significant

features caused changes in dependent variables. 6.84 (p<0.05) is the

value of F; that is significant and it indicated complete suitability of the

model (Table 4).

Table 4 depicted that income coefficient was fairly elastic and

positive; its value is 0.148 with 0.37 standard error and 3.989 as t-value

at 0 percent significance level. It showed the use of hot beverage level

will increase by 0.148 percent with an increase in the income level of 1

percent. Food expenses level was significant with t-value of -2.739 at 1%

significance level and standard error for this case is 0.033.



The research findings takes us to the conclusion that 0.089% de-

cline in hot drinks consumption is the result of 1% increase in the ex-

penses. For this case price coefficient (-0.053) has a negative sign and

showed high insignificance level. This describes that price show insig-

nificance for making choice for using the hot drinks. The marital status

and working people’s coefficients values are 0.290 and 0.217 and all the

two variables had values at 1% significance level.

The working people in family coefficient showed that 1% in-

crease in its value 0.217% increase in the hot drinks consumption and

marital status coefficient depicts that 1% increase in marital status value

that married individuals 0.290% used more hot beverages than unmar-

ried persons. In the last, living area coefficient value is 0.438 and de-

picted the fact that people living in the urban areas use more hot drinks

than the people living in the rural areas. This variable at 1 percent signif-

icance level has t-value of 2.457 and it furthermore confirmed the results

that living areas have an impact on the use of hot drinks.

5. Discussion

This research has been conducted to investigate the impact of various

factors that influence the hot and cold beverages consumption of people.

Multiple regression analysis is applied to calculate the demand function

and to estimate the outcome of different factors affecting the consumer

choices.

Two major Punjab cities i.e Lahore and Faisalabad have been

selected for data collection and 80 respondents were interviewed to

gather and analyze the data. Lahore and Faisalabad were chosen because

of many departmental stores such as AL-Fateh, Metro cash and carry

and others. Pre-tested questionnaire has been incorporated for the collec-

tion of data. Results of this study revealed that cold beverages consump-

tion pattern was influenced by cold beverages prices, city of selected sur-

vey, consumer income and number of adolescents in a family.

On the other side, consumption pattern of hot beverages, living

area, marital status, food expenditure, working persons in a family and

family size. As there are many brands available in the market due to

which beverages consumption is increasing as time passes and more im-

portantly socio-economic lifestyles are changing as well which persuade

people to consume more beverages.





By keeping in view these factors, local industry should try to

yield cost effective and quality oriented drinks to augment the usage. On

the other side, consumption pattern of hot beverages, living area, marital

status, food expenditure, working persons in a family and family size.

As there are many brands available in the market due to which beverages

consumption is increasing as time passes and more importantly socio-

economic lifestyles are changing as well which persuade people to con-

sume more beverages. By keeping in view these factors, local industry

should try to yield cost effective and quality oriented drinks to augment

the usage.

Table 4

Estimated Demand Function for Hot Beverages

Variables Coefficient Standard

Error T-Value

Significance

(P-value)

(Constant) 4.428 0.493 8.983 0.000*

Family income of

household (Rs./month) 0.148 0.037 3.989 0.000*

City of survey 0.218 0.276 .790 0.432NS

Family size of respond-

ent (No.) 0.216 0.091 2.367 0.021*

Food expenditure of re-

spondent -0.089 0.033 -2.739 0.008*

Prices of hot beverages

(Rs./gram) -0.053 0.043 1.227 0.224NS

Working people in fam-

ily (No.) 0.217 0.089 2.433 0.017*

Marital status of re-

spondent (Dummy) 0.290 0.120 2.412 0.018*

Living area of respond-

ent (Dummy) 0.438 0.178 2.457 0.016*

R2 0.435 F-value 6.840

Adjusted R2 0.372 Source: Author’s own estimations

Note: NS Denotes Non-Significant

* Denotes significant at 1 percent level



6. Conclusion

The result of this survey showed that the use of cold drinks was affected

by the survey city, number of young respondents, price of the drink and

income of the family, while hot drinks usage was effected by the size of

family, income of family, expenses of food, marital status, living area

and number of people working in the family.

It was also witnessed that availability of branded drinks in the

markets increased the use of drinks with every passing day. Due to this

reason consumers with low income are discouraged to buy these drinks

because of the high prices. High prices and decreasing buying power

were also related but it has a serious effect on the user’s real income that

affected the choice of decision to buy the beverages.

For hot beverages case, during the last few years due to the open-

ing of new cafés and restaurants in Pakistan, coffee consumption is in-

creased. But in Pakistan it is still used in higher and middle income indi-

viduals. So, there is a room to make it familiar with other people at low

price and in local brands.



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